Obesity Pill Data Portend Competition, Hitting Drugmaker Shares

(Bloomberg) — Obesity pill data released by Viking Therapeutics Inc. and AstraZeneca Plc at a big conference foreshadowed an increasingly competitive landscape for weight-loss therapies, sending down shares of drugmakers in the field.

Viking shares lost as much as 12% on Monday, the most intraday since August, after gaining as much as 8.5% in New York on promising early-stage data. Those shares fell as Astra presented data on another pill that showed similar weight-loss benefits. Shares of obesity-shot makers Eli Lilly & Co. and Novo Nordisk A/S dipped, while Astra’s closed in London with little change. 

Viking shares had quadrupled this year through Friday, buoyed by a bet on Wall Street that the next wave of growth in the obesity market is through easier-to-take pills that promise added convenience and potentially fewer side effects. Pills may also keep more patients on the drugs for longer, a potential sales driver with longterm impact.

The results dial up the intensity in the race among big pharma and smaller biotech upstarts to release obesity pills that could bring more people into a market estimated to hit $130 billion by the end of the decade. And investors have become concerned about Viking’s ability to produce its drug in sufficient quantities to satisfy potential demand, according to Joon Lee, an analyst with Truist Securities. 

Effectiveness and safety data from Viking’s study, released Sunday at an industry conference, show that an obesity pill could be a reality soon: People who took 100-milligram doses of Viking’s pill lost an average of 6.8% of their body weight after 28 days in an early-stage study of 92 people, when compared with those who took a placebo, according to a presentation at the ObesityWeek meeting.

The drug was also “well tolerated, with only mild cases of nausea and no patient discontinuations,” Michael Shah, a Bloomberg Intelligence analyst, said in a note. The side effects were similar to those of other obesity drugs. The results suggest the company could move to a mid-stage trial in the fourth quarter, Shah said.

However, AstraZeneca Plc released data at the same conference showing patients with type 2 diabetes lost an average of 5.8% of their body weight over four weeks in an early study of its GLP-1 pill, AZD5004. The reduction was important, said the British drugmaker, given that these patients typically see less weight loss with GLP-1s compared to obese patients without diabetes. 

Astra wants to combine its weight-loss drugs with other products in its portfolio, including drugs to treat heart disease. 

Novo also been developing a weight-loss pill that it has said helps patients lose roughly as much weight as its Wegovy shot. Lilly is in advanced clinical trials for its oral drug, orforglipron, which produced an average loss of about 15% of body weight in 36 weeks when given daily at the highest dose to adults with obesity, according to a mid-stage study published last year. Drugmakers including Pfizer Inc. and AstraZeneca Plc also have pills in the works.

Following Viking’s data release, Novo’s shares fell 2.1% in Copenhagen. Lilly shares lost as much as 1.7% in New York.

Viking’s weight-loss data outpaced investor expectations, ratcheting up the chances that a bigger pharma company could buy the biotech, according to Andy Hsieh, an analyst with William Blair. 

San Diego-based Viking was cofounded in 2012 by Chief Executive Officer Brian Lian, who was a research scientist in cancer and endocrine disease at Amgen Inc. before becoming an analyst at SunTrust Robinson Humphrey with a focus on diabetes and other conditions. The company is also developing drugs for non-alcoholic liver disease and other diseases.

“While we acknowledge it is risky to base our investment thesis on an eventual takeout, the prospect is reasonably high,” Hsieh said.

–With assistance from Lisa Pham and Ashleigh Furlong.

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